Mixed Use Properties
Posted: Wed Aug 22, 2012 12:10 am
Cash Collateral
This may be a weird question, but were there cash collateral issues in your
case? One thing you can do, although I'm not smart enough or experienced
enough to actually try it, is to "concede" that a cash collateral issue
exists and do a motion for cash collateral or stipulate to its use.
I think there is a strong argument that if the lender wants rents
segregated, then they are secured by more than the residence.
Looking at Lievsay, I see:
"Thus, although the debtor argues the language of the deed of trust 709 *709
demonstrates that its reach is greater than a security interest in his
residence alone, he has not shown that to be the case.[8]"
"[8] While it is true that, were a gold mine to be developed on the subject
property, the bank would doubtless assert a collateral interest in it, there
is no indication of the possibility that such an interest might exist."
Language of Deed
If you look at the deed of trust and accompanying note, somewhere, you'll
find that they try to attach everything. Although I joined this particular
case late, I made an appearance for a disclosure statement where the bank
objected to plan treatment, the lender's attorney said that they believed
cash collateral might be being used w/o their permission (on debtor's
primary residence which is now being used as rental property) - the judge
asked why they had waited this long to bring up the issue and shut her up.
Afterwards, I told her that the loan was a residential one, and therefore
there were no cash collateral issues. Her response was (maybe making it up)
that their deed of trusts now attach to all sorts of things, including
rents.
My point is, look and see what they are attaching to; maybe it's such a wide
net that you can circumvent 1123(b)(5).
Sincerely,
Michael Avanesian Esq.
michael@avanesianlaw.com
818-817-1725
The post was migrated from Yahoo.